Auckland CBD offices are being converted to apartments and hotels. We hear from an advertising executive with no previous experience in property apart from his own house, telling us what went wrong and what went right in the project. Then, we examine where else conversions occurred and one expert’s view
Property Insider: $2m+ office-to-apartment conversion: ‘What I learned’ - Ben Wilson; where other conversions happened; multimillion dollar projects often offices-to-hotel rooms
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Ben Wilson: advertising agency was initially on level two of what is now the President Hotel Auckland, 27-35 Victoria St West. Photo / Dean Purcell
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Ben Wilson, an Auckland advertising executive, converted an office floor bought pre-pandemic into eight apartments leased to Australia’s Urban Rest.
He talks of frustrations with cost and time but is already planning two more similar projects in other Auckland buildings.
It’s a bit like anyone’s home renovation - the twin anchors of money and time.
But in this case, it was particularly the challenge of changing uses which required more fire, electrical and plumbing services.
The floor in the multi-level CBD office tower was once a language school “with horrible blue carpet” and a purple wall but more recently became advertising offices.
Wilson of B M Media worked for some years from level two of the President Hotel Auckland, 27-35 Victoria St West.
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That is near Queen St, opposite the end of Elliott St, near the Woolworths.
Part of the second floor was bought in 2014, then the remainder in 2017. The resource consent application to Auckland Council for a change in use from commercial to residential was done in two stages, in 2021 and 2022.
Wilson didn’t initially expect to do the renovations this soon.
“It was supposed to be the retirement plan in about 15 years,” he says from one of the units where interior design is by wife Elara Kogan.
But the pandemic forced a re-think: he and colleagues were working from home, some staff had left “and we had empty space, so we thought we would fast-forward the project”.
Buying the floor cost just over $1m but the valuation on the eight “new” apartments is now $5.43m for the floor, Wilson said. Six are long-stay while two are short-stay units under consent conditions. The floor is owned by B M Wilson Buildings.
All 48 windows were removed, replaced by black-framed double-glazing that keeps city sounds out but still open.
The hotel building is not hard against any other buildings, allowing better access than at many other blocks.
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Urban Rest is advertising a studio for $195/night, a one-bedroom for $220/night, and a two-bedroom for $300/night.
Urban Rest chief commercial officer Jeff Baars said all eight units were being offered for rent.
Most people couldn’t afford to borrow on such an expensive project, with the prospect of relatively low returns from the apartments, even at a daily rate like Urban Rest is asking.
Wilson is reluctant to explain precisely how he afforded such a conversion but indicated he did not borrow from mainstream banks.
And now he’s upbeat on further projects, although he says he had no previous experience in property development or project management before.
Refitting the office floors with bathrooms and kitchens meant cutting into the floor slab, he said. That floor then got an acoustic layer before a wood overlay was installed.
One of the Pandey businesses of CP Group owns the President hotel.
“Building upgrades favoured by the majority of principal unit owners include new elevators, full lobby renovation, exterior painting and Victoria St glass canopy replacement expected this year,” said Wilson who is on the body corporate committee.
Largest office-to-apartment conversion
Auckland’s largest office-to-apartment conversion is by John Love’s Love & Co which engaged Naylor Love for the $150m conversion of offices into the 18-level 114-unit The CAB.
That is the former Auckland Council administration building on Aotea Square, now converted into apartments.
Love is not yet due to pay the council $3m for that building because his mezzanine funder from Australia, Qualitas, gets paid first.
Love said in March he had $70m borrowed from Qualitas and the project had cost more than $150m.
Love is yet to sell the penthouse and two sub-penthouses in the building.
On February 24, the Herald reported how he was still to pay the $3m, even though it was seven years after the initial deal and all building works were completed.
Councillors John Watson, Christine Fletcher and Mike Lee have been highly critical of the deal calling for the $3m to be repaid.
Eke Panuku chief executive David Rankin told the Herald earlier this year that under a deal struck in 2019 for Love & Co to get mezzanine finance for the project, “we are in the queue behind the financier”.
Another office-to-apartment conversion under way is the Precinct Properties/Lamont & Co Domain Collection.
Newmarket’s ex-Fidelity Life offices are becoming 69 housing units in plans by Warren & Mahoney where a new building is rising behind the existing offices opposite Auckland Domain at 101 Carlton Gore Rd.
Office-to-hotel conversions
Some Auckland offices are being converted into hotels.
New Zealand’s largest office-to-hotel refit is the $310m Precinct Properties’ conversion of the ex-HSBC Building at One Queen into the new InterContinental Auckland and Deloitte Centre above. The hotel opened a few weeks ago and Deloitte has relocated from 80 Queen St.
Property specialist Stonewood Group said in February it would convert a 15-level Auckland office block into a 322-room Radisson Red hotel in a job set to be worth about $100m.
Stonewood executive director Vicki Chow said the new hotel was planned for the office block at 280 Queen St.
Brendan Keenan, senior analyst at Whillans Realty Group, noted office-to-hotel conversions.
Keenan said many second-grade office assets were no longer fit for purpose.
Office workers were changing when and where they work.
Some businesses were moving to premium-grade offices to pull people back into the office, he noted.
“This is leading owners of older stock to explore alternative uses for their assets. There is a case to be made for converting these buildings into hotels, serviced apartments or student accommodation. But how feasible is conversion? From nunneries to prisons, dated office blocks to old department stores — there are examples of successful hotel conversion projects the world over,” Keenan wrote.
High construction costs were frustrating some new build feasibility studies.
The building at 4 Viaduct Harbour Ave was once Bayley’s offices but has been converted into the 150-room QT Hotel, Keenan noted.
A building’s existing shape and floor plan will determine how good a candidate it is for conversion.
Office floor plates can often be too deep for conversions, with wasted space and low efficiency.
Narrow rectangular buildings that can accommodate a double-loaded corridor present the best conversion opportunities. Smaller office buildings are also good candidates, with a central core and outlook on at least three sides.
Retrofitting plumbing, electrical and ventilation systems can present problems.
An office building has centralised plumbing around a limited number of main risers but converting that into a hotel needs multiple risers to handle many bathrooms, Keenan noted.
“The success of a conversion ultimately comes down to how much value lies in the existing structure and whether it can be converted cost-effectively,” Keenan concluded.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
